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Form 10-Q Synergy Empire Ltd For: Jun 30

August 15, 2022 6:37 AM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For The Quarterly Period Ended June 30, 2022

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to ____________

 

Commission File Number 333-235700

 

SYNERGY EMPIRE LIMITED

(Exact name of registrant issuer as specified in its charter)

 

Nevada   38-4096727

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

No.19 Jalan 12/118B, Desa Tun Razak, 56100, Kuala Lumpur, Malaysia.

 

Address of principal executive offices, including zip code

 

+(60)3 - 9171 2828

 

Registrant’s phone number, including area code

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name on each exchange on which registered
N/A   N/A   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer Accelerated Filer Non-accelerated Filer Smaller reporting company
      Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

 

Yes ☐ No

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 

N/A

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class   Outstanding at August 15, 2022
Common Stock, $0.0001 par value   1,000,000

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
PART I FINANCIAL INFORMATION  
     
ITEM 1. FINANCIAL STATEMENTS: F-1
  Consolidated Condensed Balance Sheets as of June 30, 2022 (unaudited) and March 31, 2022 (audited) F-1
  Consolidated Condensed Statements of Operations and Comprehensive Loss for the Three Months Ended June 30, 2022 and 2021 (unaudited) F-2
  Consolidated Condensed Statements of Shareholders’ Equity for the Three Months Ended June 30, 2022, and 2021 (unaudited) F-3
  Consolidated Condensed Statements of Cash Flows for the Three Months Ended June 30, 2022 and 2021 (unaudited) F-4
  Notes to the Unaudited Condensed Financial Statements F-5
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 3
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 6
ITEM 4. CONTROLS AND PROCEDURES 6
     
PART II OTHER INFORMATION  
     
ITEM 1 LEGAL PROCEEDINGS 7
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 7
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 7
ITEM 4 MINE SAFETY DISCLOSURES 7
ITEM 5 OTHER INFORMATION 7
ITEM 6 EXHIBITS 7
SIGNATURES 8

 

2

 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial statements

 

SYNERGY EMPIRE LIMITED.

CONSOLIDATED CONDENSED BALANCE SHEETS

AS OF JUNE 30, 2022 and MARCH 31, 2022

(Currency expressed in United States Dollars (“US$”), except for number of share)

 

   As of
June 30,
2022
   As of
March 31,
2022
 
   (Unaudited)   (Audited) 
ASSETS        
CURRENT ASSETS          
Cash and cash equivalents  $10,194   $18,561 
Trade receivables, net   300    271 
Prepaid expenses and deposits   35,247    35,773 
Inventories   14,310    11,198 
TOTAL CURRENT ASSETS  $60,051   $65,803 
           
NON-CURRENT ASSETS          
Operating lease right of use asset, net   267,482    296,760 
Plant and equipment, net   275,505    295,023 
Intangible asset, net   1,315    1,418 
TOTAL ASSETS  $604,353   $659,004 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Accounts payable  $11,210   $11,811 
Accrued expenses and other payables   75,445    93,901 
Operating lease liability   63,376    65,552 
Bank borrowing   16,538    16,936 
Amount due to a director   1,155,154    1,066,422 
TOTAL CURRENT LIABILITIES  $1,321,723   $1,254,622 
           
NON-CURRENT LIABILITIES          
Operating lease liability   204,710    231,556 
Bank borrowing   3,759    8,445 
TOTAL LIABILITIES  $1,530,192   $1,494,623 
           
STOCKHOLDERS’ EQUITY          
Preferred stock – Par value $0.0001; Authorized: 500,000 None issued and outstanding   -    - 
Common stock – Par value $0.0001; Authorized: 5,000,000 Issued and outstanding: 1,000,000 shares as of June 30 and March 31, 2022   100    100 
Additional paid-in capital   784,083    784,083 
Accumulated other comprehensive income/(loss)   33,106    (20,271)
Accumulated deficit   (1,743,128)   (1,599,531)
TOTAL STOCKHOLDERS’ DEFICIT  $(925,839)  $(835,619)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $604,353   $659,004 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 F-1 
 

 

SYNERGY EMPIRE LIMITED

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

   2022   2021 
   For the Three Months Ended,
June 30
 
   2022   2021 
   (Unaudited)   (Unaudited) 
         
REVENUE  $44,909   $11,047 
           
COST AND EXPENSES:          
Cost of revenue   (20,963)   (3,989)
General and administrative expenses   (167,029)   (121,868)
Total operating costs and expenses   (187,992)   (125,857)
Loss from operations   (143,083)   (114,810)
           
Other income, net   (514)   8,379 
           
Loss before income tax   (143,597)   (106,431)
           
Income tax expense   -    - 
           
Net loss   (143,597)   (106,431)
           
Foreign currency translation gain   53,377    2,302 
           
Total comprehensive loss  $(90,220)  $(104,129)
           
Net loss per share, basic and diluted  $(0.14)  $(0.11)
           
Weighted average number of common shares outstanding, basic and diluted   1,000,000    1,000,000 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 F-2 
 

 

SYNERGY EMPIRE LIMITED

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

   NUMBER
OF
Shares
   Amount   Additional
Paid-in
Capital
   Accumulated
(DEFICIT)/
PROFIT
   Accumulated
comprehensive
loss
   Total
STOCKHOLDERS
EQUITY
 
   Common Stock                 
   NUMBER
OF
Shares
   Amount   Additional
Paid-in
Capital
   Accumulated
(DEFICIT)/
PROFIT
   Accumulated
comprehensive
loss
   Total
STOCKHOLDERS
EQUITY
 
Balance as of April 1, 2022   1,000,000   $100   $784,083   $(1,599,531)  $(20,271)  $(835,619)
Net loss for the period   -    -    -    (143,597)   -    (143,597)
Foreign currency translation   -    -    -    -    53,377    53,377 
Balance as of June 30, 2022   1,000,000   $100   $784,083   $(1,743,128)  $33,106   $(925,839)

 

   Common Stock                 
   NUMBER
OF
Shares
   Amount   Additional
Paid-in
Capital
   Accumulated
(DEFICIT)/
PROFIT
   Accumulated
comprehensive
loss
   Total
STOCKHOLDERS
EQUITY
 
Balance as of April 1, 2021   1,000,000   $100   $784,083   $(1,156,263)  $(34,804)  $(406,884)
Net loss for the period   -    -    -    (106,431)   -    (106,431)
Foreign currency translation   -    -    -    -    2,302    2,302 
Balance as of June 30, 2021   1,000,000   $100   $784,083   $(1,262,694)  $(32,502)  $(511,013)

 

See accompanying notes to consolidated financial statements

 

 F-3 
 

 

SYNERGY EMPIRE LIMITED

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

FOR THREE MONTHS ENDED JUNE 30, 2022 AND 2021

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

   2022   2021 
   For the Three Months Ended,
June 30
 
   2022   2021 
   (Unaudited)   (Unaudited) 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(143,597)  $(106,431)
Adjustments to reconcile net loss to net cash used in operating activities          
Depreciation expenses   31,882    35,695 
Write off of other receivables   699    - 
Changes in operating assets and liabilities:          
Increase in accounts receivable   (740)   - 
Increase in inventories   (3,664)   (1,363)
Increase in prepaid expenses   (642)   (122)
Decrease in accounts payable   (57)   (926)
Decrease in accrued liabilities   (15,365)   (89,420)
Change in operating lease liability   (15,413)   (15,921)
Net cash flows used in operating activities  $(146,897)  $(178,488)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of plant and equipment   (10,209)   (30,184)
Application of trademark   -    (1,591)
Net cash flows used in investing activities  $(10,209)  $(31,775)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Advance from directors   126,075    - 
Principal repayments of bank loan   (3,938)   (3,773)
Net cash flows (used in)/provided by financing activities  $122,137   $(3,773)
           
Effect of exchange rate changes  $26,602   $1,649 
           
Net changes in cash and cash equivalents   (8,367)   (212,387)
Cash and cash equivalents, beginning of year   18,561    345,161 
           
CASH AND CASH EQUIVALENTS, END OF YEAR  $10,194   $132,774 
           
SUPPLEMENTAL CASH FLOWS INFORMATION          
           
Income taxes paid  $-   $- 
Interest paid  $514   $955 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 F-4 
 

 

SYNERGY EMPIRE LIMITED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

1. ORGANIZATION AND BUSINESS BACKGROUND

 

Synergy Empire Limited (“the Company”) was incorporated under the laws of the State of Nevada on October 17, 2018. We have historically conducted our business through Lucky Star F&B Sdn. Bhd. and SH Dessert Sdn. Bhd, both are private limited liability company, incorporated in Malaysia.

 

On January 16, 2019, the Company acquired 100% of the equity interests of Synergy Empire Holding Limited, a company incorporated in Republic of the Marshall Islands (“Synergy Empire Marshall”).

 

On December 31, 2018, Synergy Empire Marshall acquired 100% of Synergy Empire Limited, a limited liability company incorporated in Hong Kong (“Synergy Empire HK”).

 

On February 21, 2019, Synergy Empire HK acquired 100% of the equity interests of Lucky Star F&B Sdn. Bhd., a limited liability company incorporated in Malaysia (“Lucky Star”).

 

Lucky Star acquired 100% of the equity interests of SH Dessert Sdn. Bhd., a limited liability company incorporated in Malaysia (“SH Dessert”) by Lucky Star on February 19, 2016.

 

On February 26, 2021, Synergy Empire Marshall acquired 100% of Lucky Star F&B Sdn. Bhd from Synergy Empire HK. Subsequently on March 31, 2021, Mr. Leong Will Liam acquired 100% of Synergy Empire HK, as such Synergy Empire HK is no longer a subsidiary of the Company.

 

Mr. Leong Will Liam is the common director and major shareholder of the Company, Synergy Empire Marshall, Synergy Empire HK, Lucky Star and SH Dessert.

 

The Company, through its wholly owned subsidiaries, produce and distribute high quality dessert through Lucky Star and operate two restaurants through SH Dessert. Details of the Company’s subsidiaries:

 

No.   Company Name   Domicile and Date of
Incorporation
  Particulars of Issued
Capital
  Principal Activities
1   Synergy Empire Holding Limited   Marshall Islands, October 22, 2018   1 Share of Ordinary Share, US$1 each   Investment Holding
                 
2   Lucky Star F&B Sdn. Bhd.   Malaysia, February 9, 2010   100,000 Share of Ordinary Share, MYR1 each   Dessert Producer and Distributor
                 
3   SH Dessert Sdn. Bhd.   Malaysia, February 19, 2016   100 Share of Ordinary Share, MYR1 each   Restaurant Operator

 

 F-5 
 

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

These accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

 

The accompanying financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany transactions and balances were eliminated in consolidation.

 

Below is the organization chart of the Group.

 

 

 

Use of Estimates

 

In preparing these financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.

 

Cash and Cash Equivalents

 

The Company considers short-term, highly liquid investments with an original maturity of 90 days or less to be cash equivalents.

 

Our deposit in Malaysia is currently deposit in Public Bank Berhad and Standard Chartered Bank (Malaysia) Berhad, and there is a Perbadanan Insurans Deposit Malaysia protects our eligible deposits held with bank in Malaysia which is members of the Scheme. The scheme will pay a compensation up to a limit of Malaysia Ringgit (“MYR”) 250,000 per deposit per member bank, which is equivalent to $56,719, if the aforementioned banks fail.

 

Plant and Equipment

 

Plant and equipment are stated at cost, with depreciation provided using the straight-line method over the following periods:

 

Asset Categories   Depreciation Periods
Renovation   over the remaining lease period
Office and kitchen equipment   10 years
Motor vehicle   5 years

 

Intangible Asset

 

Intangible assets are stated at cost, with amortization provided using the straight-line method over the following periods:

 

Asset Categories   Amortization Periods
Trademark   10 years

 

 F-6 
 

 

Inventories

 

Inventories consisting of products available for sell, are stated at the lower of cost or market value. Cost of inventory is determined using the first-in, first-out (FIFO) method. Inventory reserve is recorded to write down the cost of inventory to the estimated market value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership, risks and rewards of the products purchased. Write downs are recorded in cost of revenue in the consolidated statements of operations and comprehensive income (loss).

 

Revenue recognition

 

Revenue is generated through sale of goods and delivery services. Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods and services. The Company applies the following five-step model in order to determine this amount:

 

(i) identification of the promised goods and services in the contract;

 

(ii) determination of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the contract;

 

(iii) measurement of the transaction price, including the constraint on variable consideration;

 

(iv) allocation of the transaction price to the performance obligations; and

 

(v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under Topic 606, the Company records revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. The Company records revenue from the sale of product upon shipment or delivery of the products to the customer. The Company doesn’t allow return of the products purchased or refund unless the food delivered is spoilt.

 

Cost of revenue

 

Cost of revenue includes the purchase cost of raw material for manufacturing and distribute to customers and packing materials. It includes purchasing and receiving costs, internal transfer costs, other costs of distribution network, opening and closing inventory net off discount received and return outwards in cost of revenue.

 

Income tax expense

 

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclosed in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

The Company conducts major businesses in Malaysia and is subject to tax in their own jurisdictions. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.

 

 F-7 
 

 

Foreign currencies translation

 

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations and comprehensive income (loss).

 

The functional currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the Company’s subsidiary maintains its books and record in Malaysian Ringgits (“MYR”) and United States Dollars (“US$”), which is the respective functional currency as being the primary currency of the economic environment in which the entity operates.

 

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income.

 

Translation of amounts from the local currency of the Company into US$1 has been made at the following exchange rates for the respective periods:

 

   For the three months ended
June 30
 
   2022   2021 
Period-end MYR : US$1 exchange rate   4.41    4.15 
Period-average MYR : US$1 exchange rate   4.38    4.12 

 

Related parties

 

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

 

Fair value of financial instruments

 

The carrying value of the Company’s financial instruments: cash and cash equivalents, trade receivable, deposits and other receivables, amount due to related parties and other payables approximate at their fair values because of the short-term nature of these financial instruments.

 

The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

 

Level 1 : Observable inputs such as quoted prices in active markets;

 

Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

As of June 30, 2022 and 2021, the Company did not have any nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Company have any assets or liabilities measured at fair value on a non-recurring basis.

 

Net Income/(Loss) per Share

 

The Company calculates net income/(loss) per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income/(loss) per share is computed by dividing the net income/(loss) by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income/(loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

 

 F-8 
 

 

Recently Issued Accounting Standards

 

Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 

3. GOING CONCERN UNCERTAINTIES

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The company having accumulated deficit of $1,743,128 and $1,599,531 as of June 30, 2022 and March 31, 2022 respectively.

 

For the three months ended June 30, 2022 and 2021, the Company suffered from a net loss of $143,597 and $106,431 respectively.

 

Furthermore, the Company recorded a negative working capital of $1,261,672 and $1,188,819 as of as of June 30, 2022 and March 31, 2022 respectively.

 

The Company’s cash position is not sufficient to support the Company’s daily operations. While the Company believes in the viability of its strategy and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to improve profitability and the ability to acquire financial support from its shareholder.

 

These and other factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that financial statements are issued. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to continue as a going concern.

 

4. PREPAID EXPENSES AND DEPOSITS

 

   As of
June 30, 2022
   As of
March 31, 2022
 
Rental deposits  $21,031   $22,048 
Other deposits   1,597    - 
Prepaid expenses   12,619    12,050 
Other receivables   -    1,675 
Total  $35,247   $35,773 

 

The rental deposits represent the deposit of the tenancy agreements.

 

Other deposits consist of deposit of copy machine, coffee machine and security deposits.

 

Prepaid expenses represent the deposit payments of public utilities, such as electricity, telephone, water supplies.

 

5. INVENTORIES

 

   As of
June 30, 2022
   As of
March 31, 2022
 
Raw material, at cost  $14,310   $11,198 

 

 F-9 
 

 

6. PLANT AND EQUIPMENT

 

   As of
June 30, 2022
   As of March
31, 2022
 
Renovation  $343,832   $360,458 
Office equipment   39,420    41,187 
Kitchen equipment   41,899    33,427 
Motor vehicle   11,117    11,654 
Total plant and equipment  $436,268   $446,726 
Less: Accumulated depreciation   (160,763)   (151,703)
Total plant and equipment  $275,505   $295,023 

 

For the three months ended June 30, 2022, the Company has invested $10,076 in kitchen equipment and $134 in office equipment respectively.

 

For the three months ended June 30, 2021, the Company had invested $6,036 in kitchen equipment, $8,499 in renovations and $15,649 in office equipment respectively.

 

Depreciation expenses for three months ended June 30, 2022 and 2021 amounted to $16,157 and $19,446 respectively.

 

7. ACCRUED EXPENSES AND OTHER PAYABLES

 

   As of
June 30, 2022
   As of
March 31, 2022
 
Accrued expenses  $35,564   $50,388 
Other payables   39,881    43,513 
Total  $75,445   $93,901 

 

Accrued expenses consist of accrued salary, utilities bills and professional fee.

 

Other payable consist of outstanding marketing expenses, payables to suppliers, loan from third party and sales and service tax payable.

 

8. AMOUNT DUE TO A DIRECTOR

 

As of March 31, 2022, the Company has an outstanding loan payable to Mr. Leong Will Liam amounted $1,066,422. Of which including an amount due to Synergy Empire HK, amounted $24,822. For the three months ended June 30, 2022, Mr. Leong Will Liam has further advanced $126,075 to the Company for working capital purpose.

 

Both aforementioned loans are unsecured, non-interest bearing and payable on demand.

 

Amount due to director, Mr. Leong Will Liam     
Balance as of March 31, 2022  $1,041,600 
Loan from Director   126,075 
Foreign currency translation   (37,343)
Balance as of June 30, 2022  $1,130,332 
Balance as of June 30, 2022 - Amount due to Synergy Empire HK   24,822 
Balance as of June 30, 2022 - Total amount due to director  $1,155,154 

 

 F-10 
 

 

9. BANK BORROWING

 

On January 25, 2017, Lucky Star F&B Sdn. Bhd., a wholly owned subsidiary of the Company has acquired a business loan from Standard Chartered Saadiq Berhad, a bank incorporated in Malaysia, amounted to MYR342,834 (approximately $83,972) at annual interest of 6.00% accrue in arrear, for a repayment period of 72 months with interest bearing monthly installment of MYR6,473 (approximately $1,585) which is the sole bank borrowing by the Company.

 

The outstanding balance of business loan as of June 30 and March 31, 2022 can be summarized as follow:

 

   As of
June 30, 2022
   As of
March 31, 2022
 
Bank borrowing (Current portion)  $16,538   $16,936 
Bank borrowing (Non-current portion)   3,759    8,445 
Total  $20,297   $25,381 

 

On April 1, 2020, Standard Chartered Saadiq Berhad announced to provide loan deferment to borrower for a period 6 months in supporting of Malaysia National Bank to ease financial pressure as a result of movement control order promulgated by Malaysia Government to contain the outbreak of COVID- 19. Pursuant to the announcement, no instalment is required, and no penalty will be imposed during the 6 months period however additional non-compounding interest will continue to accrue. As such, the Company has incurred additional interest of $2,141 interest expenses. The last repayment is expected on August 2023.

 

For the three months ended June 30, 2022, the Company repaid $3,938 in bank borrowings.

 

For the three months ended June 30, 2021, the Company repaid $3,773 in bank borrowings.

 

Maturities of the loan for each of the three years and thereafter are as follows:

 

Year ending March 31     
      
2023  $12,260 
2024  $8,037 
Total  $20,297 

 

 F-11 
 

 

10. LEASE RIGHT-OF-USE ASSET AND LEASE LIABILITIES

 

Right-Of-Use Assets     
Balance as of March 31, 2022   296,760 
Amortization for the three months ended June 30, 2022   (15,590)
Adjustment for discount rate   - 
Foreign exchange translation   (13,688)
Balance as of June 30, 2022   267,482 

 

For the three months ended June 30, 2022 and 2021, the amortization of the operating lease right of use asset amounted $15,590 and $16,222, respectively.

 

Lease Liability     
Balance as of March 31, 2022   297,108 
Imputed interest   3,672 
Gross repayment   (18,990)
Foreign exchange translation   (13,704)
Balance as of June 30, 2022   268,086 
Lease liability current portion   63,376 
Lease liability non-current portion  $204,710 

 

Maturities of operating lease obligation as follow:

 

-   - 
Year ending    
March 31, 2023   47,210 
March 31, 2024   65,990 
March 31, 2025   62,983 
March 31, 2026   52,400 
March 31, 2027   20,101 
February 29, 2028   19,402 
Total  $268,086 

 

Other information:

 

   For the three months ended
June 30
 
   2022   2021 
Cash paid for amounts included in the measurement of lease liabilities:        - 
Operating cash flow to operating lease  $19,382   $20,597 
Right-of-use assets obtained in exchange for operating lease liabilities   -    - 
Remaining lease term for operating lease (years)   4.20    4.14 
Weighted average discount rate for operating lease   5.40%   5.70%

 

 F-12 
 

 

11. CONCENTRATION OF RISK

 

(a) Major Customers

 

For the three months ended June 30, 2022 and 2021, there was no customer who accounted for 10% or more of the Company’s revenues nor with significant outstanding receivables.

 

(b) Major Suppliers

 

For the three months ended June 30, 2022 and 2021, there was no supplier who accounted for 10% or more of the Company’s purchases nor with significant outstanding payables.

 

12. INCOME TAXES

 

The loss before income taxes of the Company for the three months ended June 30, 2022 and 2021 were comprised of the following:

SCHEDULE OF INCOME (LOSS) BEFORE INCOME TAXES 

   For the three months ended
June 30
 
   2022   2021 
Tax jurisdictions from:          
– Local  $(40,188)  $(10,583)
           
– Foreign, representing:          
Marshall Islands (non-taxable jurisdiction)   -    - 
Hong Kong   -    - 
Malaysia   (103,409)   (95,848)
Loss before income taxes  $(143,597)  $(106,431)

 

 F-13 
 

 

Provision for income taxes consisted of the following:

 

    For the three months ended
June 30
 
    2022    2021 
Current:          
– Local  $-   $- 
– Foreign:          
Marshall Islands (non-taxable jurisdiction)   -    - 
Malaysia   -    - 
           
Deferred:          
– Local   -    - 
– Foreign   -    - 
   $-   $- 

 

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. During the periods presented, the Company has a number of subsidiaries that operates in different countries and is subject to tax in the jurisdictions in which its subsidiaries operate, as follows:

 

United States of America

 

The Tax Act reduces the U.S. statutory corporate tax rate from 35% to 21% for our tax years beginning in 2018. The Company is registered in the State of Nevada and is subject to United States of America tax law. As of June 30, 2022, the operations in the United States of America incurred $231,109 of cumulative net operating losses (NOL’s) which can be carried forward to offset future taxable income. The NOL carry forwards begin to expire in 2042, if unutilized. The Company has provided for a full valuation allowance of approximately $48,533 against the deferred tax assets on the expected future tax benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

Malaysia

 

Lucky Star F&B Sdn. Bhd. and SH Desserts Sdn. Bhd. are subject to the Malaysia Corporate Tax Laws at a two-tier corporate income tax rate based on amount of paid-up capital. The 2022 tax rate for company with paid-up capital of MYR 2,500,000 (approximately $603,486) or less and that are not part of a group containing a company exceeding this capitalization threshold is 17% on the first MYR 600,000 (approximately $120,060) taxable profit with the remaining balance being taxed at 24%.

 

For the three months ended June 30, 2022, Lucky Star F&B Sdn. Bhd. and SH Desserts Sdn. Bhd incurred a loss of $61,673 and $41,736, respectively, which can be carried forward for seven years to offset its taxable income.

 

As of June 30, 2022, the operations in Malaysia generated $1,508,775 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss can be carried forward for seven years. The Company has provided for a full valuation allowance against the deferred tax assets of $256,440 on the expected future tax benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

 F-14 
 

 

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of June 30 and March 31, 2022:

 

   As of
June 30, 2022
   As of
March 31, 2022
 
Deferred tax assets:          
           
Net operating loss carryforwards  $   $ 
– United States of America   48,533    40,093 
– Marshall Islands   -    - 
– Malaysia   256,440    238,867 
    304,973    278,960 
Less: valuation allowance   (304,973)   (278,960)
Deferred tax assets  $-   $- 

 

Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets of $304,973 as of June 30, 2022. For three months ended June 30, 2022, the valuation allowance increased by $26,013, primarily relating to the loss incurred by the Company, Lucky Star F&B Sdn. Bhd and SH Desserts Shd. Bhd.

 

13. STOCKHOLDERS’ EQUITY

 

On October 17, 2018, the founder of the Company, Mr. Leong Will Liam purchased 900,000 shares of restricted common stock of the Company at $0.03 per share for the Company’s initial working capital. Each share was with a par value of $0.0001. All proceeds received are used for the Company’s working capital.

 

On January 21, 2019, CBA Capital Holdings Sdn. Bhd. waived an interest-free loan of $257,183 in Lucky Star F&B Sdn. Bhd., our wholly own subsidiary, as contribution and recorded in additional paid in capital. CBA Capital Holdings Sdn. Bhd. is wholly owned by our Director, Mr. Leong Will Liam.

 

On December 30, 2020, the Company resolved to close the offering from the registration statement on Form S-1/A, dated February 25, 2020, that had been declared effective by the Securities and Exchange Commission on March 10, 2020. The Offering resulting in 100,000 shares of common stock being sold at $5.00 per share for a total of $500,000. The proceed of $500,000 will become the capital for our expansion, pursuant to the use of proceed stated in the aforementioned Form S-1/A.

 

As of March 31, 2021, the Company have an issued and outstanding share of common stock of 1,000,000 with an authorized share of common stock of 450,000,000 with a par value of $0.0001. In addition, the Company have an authorized share of preference stock of 50,000,000 with a par value of $0.0001, however no share of preference stock was issued and outstanding as of March 31, 2021.

 

During the year ended March 31, 2022, the Company reduce authorized share capital for both common stock of 450,000,000 to 5,000,000 and preferred stock of 50,000,000 to 500,000, while par value remains the same for both common and preferred stock. As of June 30, 2022, the Company have an issued and outstanding share of common stock of 1,000,000 while no preferred share was issued and outstanding.

 

14. FOREIGN CURRENCY EXCHANGE RATE

 

The Company cannot guarantee that the current exchange rate will remain stable, therefore there is a possibility that the Company could post the same amount of income for two comparable periods and because of the fluctuating exchange rate post higher or lower income depending on exchange rate converted into US$ at the end of the financial year. The exchange rate could fluctuate depending on changes in political and economic environments without notice.

 

15. SEGMENT REPORTING

 

ASC 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about services categories, business segments and major customers in financial statements. The Company has single reportable segment based on business unit, food and beverage business and single reportable segment based on country, Malaysia.

 

In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes.

 F-15 
 

 

         
   For the Three Months Ended and As of
June 30, 2022
 
By Business Unit  Food & Beverage
Business
   Total 
Revenue  $44,909   $44,909 
           
Cost of revenue   (20,963)   (20,963)
General and administrative expenses   (167,029)   (167,029)
           
Loss from operations   (143,083)   (143,083)
           
Total assets  $604,353   $604,353 
Capital expenditure  $10,209   $10,209 

 

         
   For the Three Months Ended and As of
June 30, 2021
 
By Business Unit  Food & Beverage
Business
   Total 
Revenue  $11,047   $11,047 
           
Cost of revenue   (3,989)   (3,989)
General and administrative expenses   (121,868)   (121,868)
           
Loss from operations   (114,810)   (114,810)
           
Total assets  $809,780   $809,780 
Capital expenditure  $30,184   $30,184 

 

 

               
   For the Three Months Ended and As of
June 30, 2022
 
By Country  United States   Malaysia   Total 
Revenue  $ -   $44,909   $44,909 
                 
Cost of revenue    -    (20,963)   (20,963)
General and administrative expenses    -    (167,029)   (167,029)
                 
Loss from operations    -    (143,083)   (143,083)
                 
Total assets  $ 7,310   $597,043   $604,353 
Capital expenditure  $ -   $10,209   $10,209 

 

               
   For the Three Months Ended and As of
June 30, 2021
 
By Country  United States   Malaysia   Total 
Revenue  $ -   $11,047   $11,047 
                 
Cost of revenue    -    (3,989)   (3,989)
General and administrative expenses    -    (121,868)   (121,868)
                 
Loss from operations    -    (114,810)   (114,810)
                 
Total assets  $ 24,721   $785,059   $809,780 
Capital expenditure  $ -   $30,184   $30,184 

 

 F-16 
 

 

16. SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after June 30, 2022 up through the date the Company presented these audited financial statements.

 

On May 28, 2021, Malaysia Prime Minister announced that a nationwide “total lockdown” will be imposed on all social and economic sectors in Malaysia from June 1 to June 14, 2021. Under this lockdown, only essential economic and social services listed by the National Security Council will be allowed to operation. Restaurants operation will be limited to delivery and take away while dine in is strictly prohibited.

 

On June 12, 2021, the Malaysian Government extended the country’s total lockdown by another two weeks until 28 June. The Company believes, with dine in restriction, having direct adverse impact on Company financial performance until such restriction removed.

 

On 15 June 2021, the Malaysia Government introduced a four-phase National Recovery Plan to help the country emerge from the COVID-19 pandemic and its economic fallout. As each phase is based on the number of new cases, people requiring ICU treatment, and vaccination rates, it can be extended, or moved on to the next phase, whenever possible.

 

Phase 1 - Conditions are the same as “total lockdown” launched from 1 June 2021. No social gatherings, dine-in eating at restaurants, interstate travel and non-essential services are permitted. Any remaining workplaces are required to have their workers work from their homes. This phase, based on the critical condition of the healthcare services, may last until end of July.

 

Phase 2 - If more people are vaccinated, ICU bed usage reduced to a moderate level; and new cases fall below 4,000, the country will move on to the next phase which allows more economic sectors to resume operation.

 

Phase 3 - Once daily cases are reduced to 2,000, the healthcare system has returned to a manageable level; ICU cases have been reduced to an adequate amount; and 40% of the people have been vaccinated. All economic sectors will be allowed to operate and most importantly dining in restaurants and cafes will be allowed. This phase will be expected to start on late August.

 

Phase 4 - Once daily cases have dropped to 500, the healthcare system becomes safe as ICU cases become low enough; and 60% of the people have been vaccinated. This phase will be expected to start on late October.

 

The Company’s central kitchen and two restaurants were and will continue to operate throughout each phase of NRP, however improvement on financial performance will not be expected until late August which is the beginning of Phase 3 where dining in restaurants and cafes will be allowed.

 

 F-17 
 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The information contained in this quarter report on Form 10-Q is intended to update the information contained in our Form 10-K dated July 14, 2022, for the year ended March 31, 2022 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

 

Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.

 

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

 

Overview

 

We share the same business plan as that of our subsidiaries. We are engaged in the production and sale of food products, specifically dessert created and sold through various restaurants that we operate in Malaysia. We sell our goods under our brand name “Sweet Hut.” We have two dessert restaurant chains and one central kitchen.

 

It is worth highlighting that, on 15 June 2021, Malaysia Government introduced a four-phase National Recovery Plan (herein and after referred the “NRP”) to help the country emerge from the COVID-19 pandemic and its economic fallout. As each phase is based on the number of new cases, people requiring ICU treatment, and vaccination rates, it can be extended, or moved on to the next phase, whenever possible.

 

Phase 1 - Conditions are the same as “total lockdown” launched from 1 June 2021. No social gatherings, dine-in eating at restaurants, interstate travel and non-essential services are permitted. Any remaining workplaces are required to have their workers work from their homes. This phase, based on the critical condition of the healthcare services, may last until end of July.

 

Phase 2 - If more people are vaccinated, ICU bed usage reduced to a moderate level; and new cases fall below 4,000, the country will move on to the next phase which allows more economic sectors to resume operation.

 

Phase 3 - Once daily cases are reduced to 2,000, the healthcare system has returned to a manageable level; ICU cases have been reduced to an adequate amount; and 40% of the people have been vaccinated. All economic sectors will be allowed to operate and most importantly dining in restaurants and cafes will be allowed. This phase will be expected to start on late August.

 

Phase 4 - Once daily cases have dropped to 500, the healthcare system becomes safe as ICU cases become low enough; and 60% of the people have been vaccinated. This phase will be expected to start on late October.

 

The Company’s central kitchen and two restaurants were and will continue to operate throughout each phases of NRP.

 

Results of Operations

 

For the three months ended June 30, 2022 and 2021, the Company has generated a revenue of $44,909 and $11,047. Breakdown of revenue as following:

 

   Three months ended
June 30
 
   2022   2021 
Dine-In and Take Away Revenue  $26,495   $6,257 
Percentage towards Total Revenue   59.00%   56.64%
           
Delivery Revenue  $18,414   $4,790 
Percentage towards Total Revenue   41.00%   43.36%
           
Total Revenue  $44,909   $11,047 
           
Total Cost of Sales  $20,963   $3,989 
           
Total Gross Profit  $23,946   $7,058 
Gross Profit Margin   53.32%   63.89%

 

 3 
 

 

The Company has experience significant deterioration in both delivery and dine in & take away revenue segment due to several reasons. One being the closure of previous four restaurants since September 2020 and launching of two brand new restaurants in C180 and Sri Petaling which commence operation on February and June 2021, respectively for business rebranding purpose and another being adversely impacted by COVID-19 Movement Control Order imposed by Malaysia Government.

 

Revenue for the Three Months ended June 30, 2022 and 2021

 

Dine-in and take away revenue improved from $6,257 for the three months ended June 30, 2021 to $26,495 for the three months ended June 30, 2022.

 

Delivery revenue improved from $4,790 for the three months ended June 30, 2021 to $18,414 for the three months ended June 30, 2022.

 

Total revenue improved from $11,047 for the three months ended June 30, 2021 to $44,909 for the three months ended June 30, 2022, primarily due to improvement in dine-in and take away revenue as a result of the relaxation of NRP, which previously discourage nearby residents to travel beyond restricted area for dining and take away thusly.

 

General and Administrative Expenses

 

For the three months ended June 30, 2022 and 2021, the Company has incurred a general and administrative expenses of $167,029 and $121,868 respectively. Of which primarily consist of salary, lease expenses, utilities, depreciation, professional fees and repair and maintenance and advertisement and promotions.

 

   Three months ended
June 30
 
Primary expenses  2022   2021 
Salary and salary related expenses  $68,913   $53,472 
Percentage towards General and Administrative Expenses   41.26%   43.88%
           
Lease expenses  $19,382   $20,597 
Percentage towards General and Administrative Expenses   11.60%   16.90%
           
Utility expenses  $8,955   $6,236 
Percentage towards General and Administrative Expenses   5.36%   5.12%
           
Depreciation and amortization expenses  $16,194   $19,473 
Percentage towards General and Administrative Expenses   9.70%   15.98%
           
Professional expenses  $13,325   $6,647 
Percentage towards General and Administrative Expenses   7.98%   5.45%
           
Repair and maintenance expenses  $3,138   $2,988 
Percentage towards General and Administrative Expenses   1.88%   2.45%
           
Compliance expenses  $410   $736 
Percentage towards general and administrative expenses   0.24%   0.60%
           
Advertisement and promotion expenses  $2,967   $- 
Percentage towards General and Administrative Expenses   1.78%   -%
           
Total primary expenses  $133,284   $110,149 
Percentage towards General and Administrative Expenses   79.80%   90.38%
           
Miscellaneous expenses  $33,745    11,719 
Percentage towards General and Administrative Expenses   20.20%   9.62%

 

Net Loss

 

For the three months ended June 30, 2022 and 2021, the Company has incurred a net loss of $143,597 and $106,431 respectively.

 

 4 
 

 

Liquidity and Capital Resources

 

Cash Used In Operating Activities

 

For the three months ended June 30, 2022, the Company has used $146,897 in operating activities primarily caused by net loss from operating, decrease in accrued liability and lease liability contra by depreciation expenses add back.

 

For the three months ended June 30, 2021, the Company has used $178,488 in operating activities primarily caused by net loss from operating, decrease in accrued liability and lease liability contra by depreciation expenses add back.

 

Cash Used In Investing Activities

 

The Company has invested $10,209 in investing activity for the acquisition of new kitchen equipment and office equipment for the three months ended June 30, 2022.

 

The Company has invested $31,775 in investing activity for the acquisition of new kitchen equipment, office equipment, renovation and application of trademark for the three months ended June 30, 2021.

 

Cash Provided by Financing Activities

 

For the three months ended June 30, 2022, the Company repaid $3,938 to bank loan and received $126,075 from financing cash flow primarily consist of advances from director.

 

For the three months ended June 30, 2021, the Company repaid $3,773 to bank loan.

 

Off-balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of June 30, 2022.

 

Contractual Obligations

 

As of June 30, 2022, the Company has no contractual obligations involved.

 

 5 
 

 

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

ITEM 4 CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures:

 

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2022. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2022, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of June 30, 2022, our disclosure controls and procedures were not effective: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties and effective risk assessment; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines; and (4) lack of internal audit function due to the fact that the Company lacks qualified resources to perform the internal audit functions properly and that the scope and effectiveness of the internal audit function are yet to be developed.

 

Changes in Internal Control Over Financial Reporting:

 

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 6 
 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

 

Item 1A. Risk Factors

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

(a) None.

 

(b) None.

 

(c) None.

 

Item 3. Defaults Upon Senior Securities

 

(a) None.

 

(b) None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits

 

31.1   Rule 13(a)-14(a) / 15(d)-14(a) Certification of principal executive officer and principal financial officer
     
32.1   Section 1350 Certification of principal executive officer and principal financial officer
     
101..INS   Inline XBRL Instance Document
     
101.SCH   Inline XBRL Taxonomy Extension Schema Document
     
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
     
104   Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

 7 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  SYNERGY EMPIRE LIMITED
  (Name of Registrant)
   
Date: August 15, 2022  
   
  By: /s/ Law Jia Ming
  Name: Law Jia Ming
  Title: Chief Executive Officer, Chief Financial Officer

 

 8 

 

EXHIBIT 31.1

 

CERTIFICATION

 

I, Law Jia Ming, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of SYNERGY EMPIRE LIMITED (the “Company”) for the quarter ended June 30, 2022;

 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b. Designed such internal control over financial reporting, or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
     
  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 15, 2022 By: /s/ Law Jia Ming
    Law Jia Ming
    Chief Executive Officer, Chief Financial Officer

 

 

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of SYNERGY EMPIRE LIMITED (the “Company”) on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), The undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

 

  (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: August 15, 2022 By: /s/ Law Jia Ming
    Law Jia Ming
    Chief Executive Officer, Chief Financial Officer

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 



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